Perhaps most interesting, the Edge report claims that Microsoft is preparing to come down hard on the used game market (a market customers love, but developers/console-makers hate because they don't get a cut).

Games will be sold (optionally) on physical media -- 50 GB Blu-Ray discs (surely Blu-Ray kingpin Sony Corp. (TYO:6758) is pleased with that). But to play the game you will have to have your console connected to the internet. And each game will be uniquely associated to your Xbox Live account. While the hacker crowd may be able to come up with elaborate workarounds, for most users that spells essentially a death sentence to second-hand or used games.

The Xbox 720 will no longer allowed used games, reportedly. [Image Source: Multiplayer]

However, it puts a face on the chip, suggesting that the CPU will be manufactured by Advanced Micro Devices, Inc. (AMD) and is code-named Liverpool. The console is also expected to pack a D3D11.x 800MHz graphics solution and 8GB of DDR3 RAM.

II. Developers Say PS4 is Easier to Develop For

While Nintendo Comp., Ltd. (TYO:7974) continues to be the market's quirky character with its hot-selling Wii U -- which launched last holiday season, featuring a more minimalist hardware spec and novel mini-tablet-based gaming -- Sony and Microsoft's next generation consoles are on the surface very similar.

Most reports indicate that both consoles will launch this holiday season, although a handful of reports have suggested an early launch sometime this spring/summer. And both consoles carry a PC-like architecture. This is a major shift for Sony, which reportedly admitted internally that it "messed up" with the PS3's more custom console architecture (versus a more PC-like hardware design).

Sony's PlayStation 4 is expected to carry 8 GB of DDR3, like Microsoft's Xbox 720. Sony's "Durango" development kits. AMD is expected to use the same Liverpool CPU, as well. But where as Microsoft's GPU source has not been clarified, rumors indicate the PS4 will pack an AMD "R10XX" architecture GPU chip.

The upcoming PS4 is allegedly more powerful and easier to develop for than the Xbox 720.
[Image Source: Gamasutra]

According to Edge's industry sources, the PS4 is "slightly more powerful" and "very simple to work with." The Xbox 720 is reportedly slightly harder to develop for with the current kits, a reversal of last generation's trends.

That could spell trouble for Microsoft. However, Microsoft has some tricks up its sleeve, such as a next generation version of its Kinect motion controller and an improved version of its already thriving Xbox Live online gaming network.